Whirlpool Corp. is seeing demand for discretionary items such as appliances stabilize as consumers get used to higher mortgage rates and a shaky housing market.
(Bloomberg) — Whirlpool Corp. is seeing demand for discretionary items such as appliances stabilize as consumers get used to higher mortgage rates and a shaky housing market.
The company’s net sales fell 5.5% from a year ago to $4.6 billion in the first quarter, but they landed ahead of the $4.5 billion analysts estimated. The decline was also in line with the company’s expectations, Chief Financial Officer Jim Peters said in an interview. Consumer sentiment on discretionary purchases isn’t any worse than in the first quarter, he added.
“Mortgage rates have been up for an extended period of time,” Peters said. “The housing market has been slow for a period of time, and so that’s all kind of normalized into our run rate. We’re not seeing any deterioration off of that right now.”
The economy in the US — Whirlpool’s largest market — has been stalling as inflation and narrower access to credit weigh on consumer spending. Housing starts declined in March, while existing home sales fell by more than forecast in part as homeowners who had locked in lower mortgage rates are reluctant to move.
More than half of Whirlpool’s business comes from consumers replacing aging appliances, Peters said. The company expects another sales decline in the second quarter, but the second half of 2023 could be close to flat from the same period a year ago, when demand for appliances plummeted.
The KitchenAid owner maintained its full-year outlook for net sales and adjusted earnings per share. The company is still expecting raw materials costs to be $300 million to $400 million lower this year than last, though because of fluctuations in inputs such as steel, the decline is likely to be at the lower end of the range, Peters said.
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